Welcome back to the podcast, bribes,windle, or steel. I'm Alexandra Ragi, and today we're

talking about flags of convenience. It's a slightly obscure topic for the compliance world, but a source

of extraordinary opacity and dodged accountability. My guest is Tom Cardamone. Tom is president and

CEO of Global Financial Integrity, a Washington, D.C. think tank that provides analysis of and

proposes solutions for the problems of illicit financial flows, trade misinvoicing, and transnational

crime. Tom, thank you for joining me. My pleasure. Glad to be with you.

The shipping industry is associated with a whole slew of corruption and crime-related risks because

of its opaque nature. But what we want to talk about today is the very specific issue of flags

of convenience. Can you explain how they work and to the extent that you have a great deal of insight into

this, which countries are most active in this very secretive industry?

Every ship above a certain size must be registered under some country's flag. So oil tankers, bulk

carriers, general cargo ships, container ships, those types of

size of ships, they have to fly under some country's flag. Many countries, about 40, offer what

are known as open registries, meaning that the company that owns the ship need not be located in the country where the ship

will be registered. So I can control a company here in the States, but I can flag it or register

it in Panama, say. You don't have to have the company in Panama to register it there.

Those 40 countries that offer what are known as flags of convenience, and they're known under that term because of low

registration fees, lax regulation, little or don't tax, very poor worker rights laws, a very weak ship safety records,

so on and so forth. So it's for companies that own ships that essentially want to have a very

cheap operating cost, very low regulation and next to no taxes. To give me an idea of how many ships

fly flags of convenience, there are about 97,000 ships registered under some country's flag globally.

About 30% of those fly a flag from a state that offers flags of convenience. So it's a

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